Premier African Minerals [LSE:PREM] is a diversified, multi-commodity mining and natural resources company that is mainly focused on mining projects in southern Africa. It has some interesting active projects in Zimbabwe, but its portfolio is exciting because of its diversity across a range of different projects in areas like tungsten, lithium and tantalum, all metals which will be in increasing demand going forward.
In Zimbabwe itself, Premier African Minerals have five projects, including its flagship RHA Tungsten Mine, but also its Zulu project, which is focused on lithium and tantalum. Zulu is regarded as potentially one of the largest, undeveloped lithium-bearing pegmatite deposits in Zimbabwe. Its SAMREC-compliant Inferred Mineral Resource Estimate put the site at around 20m tonnes, grading 1.06% lithium and and 51 ppm tantalum, using a 0.5% lithium cut off grade.
Premier African Minerals announced today that it felt an opportunity exists for Zulu to be brought into early production based on a large-scale pilot plant using ore sorting technology to concentrate spodumene rich ore from other lithium minerals and gangue material before milling and floatation. The mine said this could produce a spodumene concentrate only and it could stock pile both a tantalum-rich fraction and petalite for future processing.
The market seems less than impressed with this – there had been rumours that something more might be forthcoming including around potential further funding for the company. A mini-mine does not seem like the outcome investors were hoping for.
Based on the announced plan, it is possible that such a plant could be in production in Q1 2023, funded under an interest free prepurchase payment for spodumene concentrate to be supplied. Shareholders should note that no funding has yet been arranged for this possible pilot plant and amongst many aspects of this whole concept still under scrutiny, this will still require completion.
Shares had been picking up speed since mid May, from 0.28p to 0.42p, but have slipped recently. They are, however, up over 110% in the last six months, which is not to be sniffed at.
“It is worth noting that the current demand for spodumene and the resultant prices, significantly de-risk this concept and support Premier’s recent focus in terms of both our drilling programme at Zulu that is now exclusively targeting high grade spodumene zones within the ore body at an indicated resource level, and on aspects of the DFS [Definitive Feasibility Study] in relation to implementation of the pilot plant.”
George Reach, CEO, Premier African Minerals
How does Premier African Minerals stack up against its peers?
Premier African Minerals measures up well against its closest peers in the market. Where investors should spend some time is the balance sheet of the company. Premier’s management was effective in improving its cash and cash equivalents metrics, which now sit at 0.9. This represents 929.7% change from the last reporting period. This impressive growth, specifically in contrast to their industry peers’ performance, should support an upswing in the company’s stock price.
According to Deshe Analytics, the miner’s cash and cash equivalents movement is graded at 81/100 (peer analysis using AI-driven metrics). The company has been effective in improving the value of the assets on its balance sheet, and this represents a 27.5% change from the previous report issued by Premier African Minerals. This impressive growth, specifically in contrast to their industry peers’ performance, should support an upswing in the company’s stock price.
One key balance sheet metric – equity – still looks a bit weak. But the company still appears likely to keep the momentum on its income statement metrics. It DOES stack up well against peers, with especially good revenue momentum. Premier African Minerals is not currently a value play, however, and we note a PE ratio of 40 times at last filing statement.
